Civil liberties activists said yesterday that a new report from a presidential panel on dealing with online crime contains proposals that could lead to privacy restrictions and expanded police powers.

Policing the freewheeling Internet has become an intensely contentious issue for the Clinton administration, which has sought to balance the needs of law enforcement with worries by civil liberties groups and the Internet business community that a heavy governmental hand will crush the fragile "new economy."

COMPUTER CRIME IS NOT A SERIOUS ENOUGH THREAT TO JUSTIFY PRIVACY INVASION

Whitfield of the ACLU said the report cites no evidence that computer crime is growing to a degree that would justify taking broad action. "What is missing in the report is the evidence that there is this 'widespread unlawful conduct,' as they put it, and that it presents such a serious threat to the nation that we need to unravel the Constitution."

Because businesses need to identify their customers by age and home state, Lessig predicts that people will be encouraged to carry a "digital ID" with them online, possibly built into their Web browsers. It may not be illegal to go online without an ID, but people who fail to carry one will be barred from so many Web sites that most will comply.

When digital IDs become pervasive, companies and the government will be able to control who can do what online. "Cyberspace would go from being an unregulable space to, depending on the depth of the [digital ID] certificates in the space, the most regulable space imaginable," Lessig writes. And because nations will enforce each other's laws, people will find it impossible to evade the law by operating overseas.